Risk aversion drags Wall Street down
Wall Street still has no appetite to buy the dip as inflation looks set to stay stubbornly high, which will force the Fed to tighten policy to levels that will jeopardize the soft landing that most traders were waiting. No one can confidently answer the question of when equities will bottom, but if the options market is the main focal point for many traders, it could suggest that the downward pressure on equities could last a while. Longer.
Too many investors are in risk aversion mode and targeting a steep bear market for tech stocks. The problem for tech stocks is that many companies will struggle to meet rising costs as they pay their employees with equity.
Stocks extended their decline after the New York Fed’s survey showed long-term inflation expectations jumped, raising fears of weaker growth that would likely lead to a recession. Inflation expectations for three years from now have fallen from 3.7% to 3.9%. The one-year inflation expectation fell from 6.6% to 6.3%.
Bitcoin falls below some key technical levels as endless selling on Wall Street continues. The institutional investor is paying close attention to bitcoin, as many who entered last year are now losing money on their investment. If the USD 30,000 level breaks, it could trigger a flash crash environment if multiple whales land.
Bitcoin’s long-term fundamentals haven’t changed in months, but the growth/recession issues have made it a very challenging environment for cryptos. No one is looking to buy the crypto dip right now and that makes bitcoin vulnerable here.
This article is for general information purposes only. It is not investment advice or a solution for buying or selling securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for everyone. You could lose all your deposited funds.